If you have fallen behind on your mortgage because of income issues or illness there are certain things you need to know.

Once you have some money available to put toward your mortgage it may be tempting to make several partial payments toward the arrears (the back monthly payments that should have been made, but were not). Resist this urge. Surprisingly, such partial payments are unlikely to improve your situation. This is because partial payments will usually go into what is called a suspense account. This is an account where the bank puts miscellaneous funds prior to disbursing them toward what you owe on principal, interest, fees, and escrow.

Most likely, only at the point that you have sent sufficient monies to cover your full monthly payment, plus any escrow, plus any late charges or other fees, will these funds come out of suspense and be applied to your account. Paying things piecemeal may make it a lot more difficult for you to have an accurate understanding of what you owe and what you have actually  paid.

Also, there may be a point, if you are several months behind, that your payments are taken, but are insufficient to catch you up prior to going into foreclosure. In this case, if you paid insufficient funds to catch up on the entire arrears, you have just effectively thrown away whatever money you have sent to your mortgage servicer, to stop the foreclosure.

After some months of being behind you will probably receive an Intent to Accelerate letter from your servicer. Don’t ignore this letter. This is your notice that foreclosure may be around the corner. If you have the ability to catch up on your mortgage, do so. Send in the full amount requested, not a partial amount.

If you believe that the balance shown as owing is incorrect, and has a large discrepancy, consult with an attorney. Mistakes have been known to happen and loan servicers do not always provide accurate figures. But do not ignore the Intent to Accelerate letter.

If you are not able to catch up on your mortgage, and are not granted a modification of your loan, eventually the servicer will pursue foreclosure. You may receive a Trustee Notice of Sale letter that names a specific sale date. This will be mailed from a Trustee Service who has a relationship with your servicer. A Trustee Notice of Sale letter should always include the amount needed to reinstate. Again, if you believe there is a large discrepancy between what you owe and what the bank says you owe, see an attorney.

The alternative to a Trustee Notice of Sale is a judicial foreclosure. This is a lawsuit filed by an attorney on behalf of the bank. As in any lawsuit you have the right to file an answer. In most counties there is a fee assessed by the court when you file your answer. If you file an answer with the court you will also have to serve it on the attorney that represents the bank .

However, filing an answer may not be the right thing to do. And filing an answer citing MERS as a reason that the sale should not go through is almost certainly not the right thing to do.

If you are facing foreclosure and have insufficient money to reinstate, one of your options may be to file a Chapter 13 bankruptcy. In a Chapter 13 you can have up to 60 months to catch up on any arrearage. Many times this will be your best option if your income issues have been resolved. And often a loan modification can occur after the bankruptcy has been filed, even though it would not go through before. In cases where you have a second mortgage, or other substantial debt, a Chapter 13 may also help you rid yourself of these other debts while giving you time to catch up or possibly modify your first mortgage.

Don’t file a Chapter 13 on your own (“pro se”). A Chapter 13 is a complex undertaking even when there is no mortgage arrearage. If you have a mortgage arrearage and are in foreclosure, you need to get competent help as quickly as possible. Don’t wait until the last minute, or you could end up with a substandard attorney, a non-optimum Chapter 13 Plan, or possibly no house.

Don’t ignore foreclosure; even if your servicer tells you that a loan mod is on the way; even if you have been actively working with the bank to handle some issue; even if your foreclosure has been set off numerous times before. Don’t ignore it. Seek help. In Oregon, once a foreclosure occurs the chances of having it reversed are extremely unlikely.